Home Articles Mervyn Jacobson: The alchemist

Mervyn Jacobson: The alchemist


Mervyn Jacobson is the richest man in Eden. He is the Executive Chairman of Melbourne-based biotech company, Genetic Technologies (GTG), which controls patents on 95 percent of your DNA. Once considered ‘junk’, because it lacks genetic coding, this vast area of the genome is now known to contain markers indicating our susceptibility to some of life’s most devastating diseases. GTG is cashing in on everyone else’s myopia and many in the calculating world of science are fast discovering their moral outrage. By Paul D. Ryan

The urban chic of Fitzroy is an unlikely location for the headquarters of one of Australia’s leading biotechnology companies. But no one working within the crisp, clinical facade of Genetic Technologies headquarters seems to think so. It’s a stone’s throw from Royal Melbourne Hospital, the Peter McCallum Cancer Institute and several other prominent hospitals and medical research centres.

“Of course, we’ve been here since the mid-eighties. Long before Fitzroy became fashionably bohemian,” says Karen Phillips, GTG’s Executive Assistant and Mervyn Jacobson’s gatekeeper.

I’m led through two electronic security doors and upstairs to a large board room with tropical ferns huddled at one end and Dr Mervyn Jacobson seated before them in a plump black leather chair.

It’s been a media day for Jacobson, who attended a morning presentation for the endangered Brush-Tailed Rock Wallaby, whose retreat from extinction GTG is supporting.

The front page of The Age contained a story about AFL clubs using genetic testing to assess the potential of their youth recruits. It has generated quite a fuss and Jacobson has been fielding media calls all day.

One of GTG’s core revenue streams is generated from genetic testing, first for human paternity, then paternity and pedigree in dogs, and lately the company has been offering a swab kit test to local sporting clubs so players, parents and officials can determine, for instance, whether young Toby will grow up into a strapping full forward, a lanky ruckman, a lithe wingman or a bumbling bench warmer.

It’s hot stuff, bringing many of the controversial issues surrounding genetic science home to local sporting fields around the country, where ordinary people’s sons and daughters exercise and dream in blissful ignorance of their fate.

Jacobson is a little put out by The Age story, which implies, erroneously, that GTG has been talking with the AFL clubs.

The edge of eden

Jacobson is impeccably dressed and sports a suitably cultivated silver beard. His eyes are patient, almost sad. But as I begin to speak, his entire face ignites, transformed in an instant from watchful to attentive. He leans in, lips slightly apart, as though I’m telling a joke and he’s waiting for the punch line.

But I’m asking him about GTG’s many critics; those who dismissed non-coding DNA as ‘junk’ and now clamour to undermine GTG’s golden suite of patents.

“A lot of people misunderstand the patent system. They tend to think that being a scientist means you know all about patents,’ says Jacobson. “In my experience, the opposite is more likely to be true. Scientists pursue the truth of how nature really works. That’s science. Patents are the laws of man, which are created as a result of treaties, bargaining and negotiating. They are totally separate.”

As the driving commercial force behind Genetic Technologies, Jacobson is the company’s public face and the object of its critics’ ire. He co-founded the company in 1989 with Dr Malcolm Simons, a New Zealand-born immunologist whose visionary genius was, as is so often the case, matched only by his eccentricity.

As an award winning documentary on ABC television’s Catalyst program highlighted in 2003, Simons resigned from GTG when the company went public in 2000. In a perverse twist to the tale, he is currently fighting a private battle with Multiple Myeloma, a terminal cancer of the immune system that is formed in the ‘junk’ DNA that he explored with such single-mindedness.

I broach the sensitive topic of Malcolm Simons.

“Malcolm questioned everything. To some degree that caused certain turmoil in his life. He certainly had unconventional ideas that I found very stimulating,” says Jacobson. “I was willing to work with him, and bring some of the funds to finance his ideas – many of which have turned out to be correct. The non-coding story is just one of them. Malcolm was always in some sort of turmoil. He wasn’t really your classical 9-5 sort of person. He liked to work to his own rules and he became restless and needed to go away from time to time. In the end he up and left, and didn’t return. We began the business as 50-50 partners from day one, but within a few days he had brought other people in on his side, and progressively diluted his ownership. Ultimately, on his own choice, he ended with no equity in the company.”

Patently obvious

It was an unfortunate end to a professional relationship that challenged and debunked the prevailing wisdom that only the five percent of DNA containing genetic coding was of any interest to researchers. Research findings over the last 15-20 years have revealed that non-coding DNA serves a vital function; containing sign posts pointing to susceptibility to diseases such as Alzheimer’s, HIV, heart disease, and breast, ovarian and skin cancer.

“I believe in Darwinian concepts of evolution, survival of the fittest, and that nature sorts things out over plenty of time and thousands of generations,” says Jacobson. “If the non-coding part of the DNA was junk, it would have disappeared over time. The 95 percent did not disappear because it was sufficiently important. If you don’t have it you don’t survive. People who have abnormalities in the 95 percent die. That was enough to convince me it was not junk.”

So why was this seemingly reasonable logic – based on the very evolutionary principles that underpin scientific enquiry – so revolutionary? How could so many intelligent people make such a colossal misjudgement? Jacobson puts it down to laziness and deference on the part of the scientific community.
“I think it was an easy sell for people to say, ‘It’s too complicated, so let’s not go there at the moment.’ It was easy for people to agree that it was junk. Also, many people are respectful of their elders, and if esteemed geneticists said it was junk, others were disinclined to challenge that wisdom.”

Pennies from heaven

In the early and mid nineties, Jacobson and Simons filed several patent applications covering the 95 percent non-coding DNA. These were eventually granted by the US Patent and Trademark Office.

The patents, thought to be insignificant at the time they were granted, are now a potential gold mine. When GTG went public in 2000, it finally gained the resources to initiate a licensing program and, more ominously, litigation against infringers of its patents. GTG is now scrutinising the research activities of companies and institutions all over the world. The company is working its way through a database of 2,000 names. Jacobson says the activities of approximately 400 have so far been identified as requiring closer scrutiny.

When the patents were initially granted, Jacobson made the shrewd decision to take out patent insurance, which protects GTG against being bled dry by much larger multinational companies with almost unlimited resources to spend on legal challenges.

“We don’t own anyone’s DNA. Every individual owns their own DNA,” says Jacobson. “We hold patents that give us the right, for a limited time, to charge licensing fees to anyone who wishes to conduct research using non-coding DNA. Patents are issued by governments after very careful review and exist to encourage inventorship, creativity and innovation – taking risks. It’s a chance to make some return on our initial investment and risk taking.”

Fear and loathing

Some of the most vocal critics of GTG’s commercial strategy are scientists at public institutions who believe that they are being asked to purchase a license to do research in an area that should be freely available. Francis Collins, Director of the US National Human Genome Research Institute, told delegates at the 2003 International Congress of Genetics in Melbourne that GTG’s patents were of “questionable appropriateness.”

As is so often the case for those in a position to exercise power over others, GTG is constantly faced with Machiavelli’s classic conundrum: is it better to be feared or loved?

Jacobson is quick to point out that GTG makes its intellectual property on noncoding DNA widely available through licensing. He sits back and strokes his beard wearing a wry smile, marvelling at the emergence of moral indignation when there are fees at stake.

“Some people say it’s not right that they should have to pay for something that is widely known. It’s a bit like saying we will use Bill Gates’s software, but we don’t want to pay Microsoft anything for it; we’ll just make illegal copies. Ownership of intellectual property needs to be taken quite seriously.”

Licence to grow

GTG has signed several lucrative licensing deals with biotech companies, including Perlegen Sciences, Myriad Genetics, Nanogen, Sequenom and US giant, Genzyme Corporation. In addition to this, Jacobson is pursuing exclusive IP sharing alliances as part of licensing agreements, enabling GTG to broaden its research base and increase the number of commercial services it can offer.

Every licensing deal GTG does is unique, comprising different proportions of cash, in-kind, equipment or grant back of rights. Jacobson is using the licensing program to grow the company’s asset base – accruing not only cash but also a widening circle of premium intellectual property. For example, Bionomics assigned GTG some of their research into epilepsy as part of one such licensing agreement. And Myriad Genetics licensed human breast cancer susceptibility testing back to GTG under similar terms.

“We seek to convert what they may perceive as a threat into an opportunity,” says Jacobson. “It can be frustrating when dealing with large companies because they have a legal department and a business development department and, incredibly, the two rarely communicate. We try to encourage coordination between them, to make them both aware that we are not looking for a fight; we are offering something that they haven’t had access to but need. It is often the basis of future collaboration. A win-win for both sides.”

Contained within the Genetic Technologies story is a lesson for entrepreneurs and scientists alike. Think outside the box. Stay innovative, use your advantage creatively and stick to you guns. The world will come around.

Or, as Jacobson concludes:

“I enjoy taking risk. But I’ve pursued various opportunities in my life because they made sense to pursue, not necessarily because they involved risk. New inventions are never clear. You have to go into an area where nobody has been before. It’s necessary to take some element of risk to challenge conventional wisdom.”

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